Thailand

Companies incorporated in Thailand are taxed on worldwide income. A company incorporated abroad (i.e. a company organised under foreign laws or a foreign company) is taxed on its profits arising from or in consequence of the business carried on in Thailand.

The corporate income tax (CIT) rate is 20%.

A foreign company not carrying on business in Thailand is subject to a final withholding tax (WHT) on certain types of assessable income (e.g. interest, dividends, royalties, rentals, and service fees) paid from or in Thailand. The rate of tax is generally 15%, except for dividends, which is 10%, while other rates may apply under the provisions of a double tax treaty (DTT).

Rates for companies with low paid-in capital and income

Companies and juristic partnerships with paid-in capital not exceeding 5 million Thai baht (THB) at the end of any accounting period and income from the sale of goods and/or the provision of services not exceeding THB 30 million are subject to tax at the following rates:

Petroleum income tax

International oil companies can engage in exploration and production activities in Thailand under a concession, a production sharing contract, or a service contract.

Taxation on income from petroleum operations is imposed on petroleum concessionaire companies and production sharing producers by the Petroleum Income Tax Acts (PITA). Petroleum companies under a service contract are not taxed under the PITA but under the Revenue Code.

Companies taxed under the PITA are exempt from taxes and duties on income imposed under the Revenue Code and under any other laws. The exemption applies provided that the company pays taxes and duties on income subject to the PITA or on dividends paid out of income subject to the PITA.

Petroleum companies under a concession are taxed at the rate of 50% of their annual net profit from petroleum operations, including profit from the transfer of their concession interests and other activities incidental to the petroleum operations. Deductions are allowed for ‘ordinary and necessary’ business expenses, as well as depreciation of capital expenditure, petroleum royalties, and other charges. Certain types of expenses are specifically disallowed for deduction, including interest.

A production sharing producer is taxed at the rate of 20% of its annual net profit derived from its petroleum business, including profits derived from the transfer of interests in the nature of rights, annuity, or any other recurring income as a consequence thereof.

Petroleum companies subject to PITA, including companies that have entered into a production sharing contract, can adopt (with the permission of the Director-General) a foreign functional currency for preparing its accounting books and records and keep them in a foreign language. Where this is adopted, the foreign functional currency must be used when calculating the net profit subject to petroleum income tax.

Pillar Two - Top-up Tax Decree

On 26 December 2024, the Emergency Decree on Top-up Tax, B.E. 2567 (the 'Top-up Tax Decree') was promulgated in the Thai Royal Gazette, introducing a minimum tax of 15% for large MNE groups, which came into effect for fiscal years beginning on or after 1 January 2025.

Specifically, Thailand introduced all three of the mechanisms under the Pillar Two framework, which all take effect simultaneously:  

• The Qualified Domestic Minimum Top-up Tax (QDMTT).
• The Qualified Income Inclusion Rule (QIIR).
• The Qualified Undertaxed Profits Rule (QUTPR).

The rules apply to entities located in Thailand that are part of an MNE group with a consolidated revenue exceeding EUR 750 million for at least two out of the four preceding fiscal years. The general intention is that this Thai legislation aligns with the Organisation for Economic Co-operation and Development’s (OECD’s) Pillar Two rules. However, the complexity of the legislation and evolving interpretation of the OECD framework means that differences may arise. Currently the Top-up Tax Decree provides an overarching framework to implement the OECD Pillar Two rules with details for calculations mechanisms, criteria, and conditions, as well as any relief mechanisms such as the safe habour rules, left to be regulated by subordinate legislation.

With respect to compliance requirements, the Top-up Tax Decree prescribes:

• Pillar Two Notification: Thai entities falling in scope of Pillar Two must submit a notification form to the Thai tax authorities within 15 months after the end of the financial year (or within 18 months for the transition year).  
• Global Anti-Base Erosion (GloBE) Information Return (GIR): The GIR must be submitted within 15 months after the end of the financial year (or within 18 months for the transition year). However, the GIR submission may be exempted if the GIR has already been filed by a designated entity, either in Thailand or with a jurisdiction in which Thailand has an effective Exchange of Information protocol in regards to the GIR.
• Top-up Tax Return (covering the QDMTT/IIR/UTPR tax liability charged):  The Top-up Tax return must be submitted within 15 months after the end of the financial year (or within 18 months for the transition year).

For more detailed information and the most recent updates, please visit PwC’s Pillar Two Country Tracker.

Local income taxes

There are no local government taxes on income in Thailand.